Business

Monday July 27, 2009

Suez Canal revenues drop by 7.2% on global crisis


CAIRO: Revenues from Egypt's Suez Canal have dropped this year by 7.2 percent to US$4.72 billion as a result of the global financial meltdown and piracy, the canal authority chief said Sunday.

Adm. Ahmed Fadel told reporters Sunday that the 53rd anniversary of the nationalization of the canal comes at a time of "new challenges," as the number of ships crossing the 120-mile waterway is declining.

The government-run canal connects the Mediterranean and Red seas and is one of Egypt's main foreign currency earners.

Fadel said the financial crisis and "slight" concerns about piracy off the Horn of Africa have affected revenues, the number of ships going through and the size of shipments.

Some 19,354 ships passed through the canal this year, compared to 21,080 last year, or an 8.2 percent drops.

More ships have been opting for the longer, costlier route around South Africa.

The net tonnage going through the canal has also declined by 8.9 percent compared to last year as maritime trade is downsized, Fadel said.

Egypt's late President Gamal Abdel Nasser nationalized the majority French-owned company that ran the canal in 1956 as part of his reform programs.

The move was widely considered a blow to Britain and France, the old colonial powers, and sparked a war with the two countries and Israel.

The Canal earnings have since remained one of the top revenue earners for the government.

Government officials have projected a 22 percent decline in government revenues in 2010, in large part due to declines in Suez Canal revenue and international tourism.

Canal earnings last year stood at $5.1 billion. This year's earnings remain higher than in 2007 and 2006.

Fadel said the Canal authority is working to increase the permissible draught for ships to 66 feet by this year's end.

Currently, the canal only allows ships with a draught of 58 feet, including the largest class of carriers. - AP


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